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NRZ recapitalisation on track

Following the pre-bid conference for funding of recapitalisation of a National Railways of Zimbabwe (NRZ) tender held at Rainbow Hotel, Bulawayo on May 30, the government granted national project status to this endeavour of recapitalisation to the tune of $400 million through an open tender financing process. It was noted that NRZ is a critical catalyst and plays a pivotal role in the recovery, revival and growth of the economy as it provides bulk transportation services for freight traffic and passengers. Regrettably, the NRZ has over the past few years experienced diminishing capacity to uplift all the business that is put at its disposal by customers. That phenomenon has been due to a number of challenges ranging from declining state of the track infrastructure, including the signalling and telecommunications equipment to falling availability and reliability of motive power, rolling stock and other support equipment.

By Nyasha Maravanyika

Addressing more than 80 prospective bidders, who included international and local investors, as well as government officials, NRZ board and management, workers’ representatives and key stakeholders, the permanent secretary in the ministry of Finance and Economic Development, Willard Manungo told the gathering that the process of raising the funds, either in the form of debt, equity or any creative combination, was underway with tender submission expected to close on July 4 2017. Ascertaining the government position, he pledged support for the open and formal tender approach which aims at raising funds for the comprehensive recapitalisation of the NRZ, which will ultimately alter the way Zimbabwe’s railways do business and prepare the organisation to face its challenges. He further said government, in its full support and endeavour to ensure smooth implementation of the recapitalisation project, was granting the project incentives in the form of national project status, warehousing of part of NRZ debt, conditional ring-fencing of rail-friendly bulk cargo to rail and sovereign guarantees for any loan provided. Above all this, government appointed a transaction advisor last year in the form of Deloitte and Touche, who according to their representative Stanford Taruvinga, confirmed that NRZ has the potential to reach its previous peak of moving more than 14 million tonnes of freight, which is indeed almost five times the three million tonnes currently being moved. Manungo further explained that the status of the project entails government’s commitment to providing specific incentives to ensure quick NRZ turnaround such as tax exemptions on project inputs which require importation of a lot of capital equipment. Cognisant of the fact that NRZ owes a number of institutions inclusive of its employees, it is working to initially warehouse the debt off NRZ books and then develop various strategies to deal with and liquidate the debts.

Giving a keynote address, Transport and Infrastructural Development permanent secretary Machivenyika Mapuranga chronicled government and the Sadc region’s prioritisation of the revival of NRZ in order to unlock and spur industrial activity and economic growth both within Zimbabwe and the sub-region. He further gave a chronology of government support ranging from the release of $31 million by the Ministry of Finance and Economic Development in budgetary support through Public Sector Investment Programme (PSIP) funding which saw a partial rehabilitation of infrastructure and equipment through procurement of materials, spares and equipment such as Flush-butt welding plant. It was also able to fund the establishment of UHF radio comminication networks along some of the NRZ corridors. Along the process government was able to support the overhaul of eight locomotives, 90 wagons and spruced up 40 passenger coaches, manufacture and procurement of concrete sleepers, while on the information technology front, it developed its LAN/WAN network and commenced the introduction of a SAP system, using PSIP funds.

Speaking at the same event, NRZ board chairman Larry Mavima said it was pertinent to mention that NRZ was a vital link for all sectors of the economy, as it serves the nation through its extensive rail network, stretching over 2 760 route kilometres of 1 067mm gauge track with links to South Africa, Mozambique, Zambia and Botswana. He further said that it is in the same vein that far-reaching changes are envisaged and tomorrow’s railways will focus more than ever before on meeting the demands and growing expectations of its customers.

Nyasha Maravanyika is the NRZ public relations manager.

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